Mandeville v. Welch

Mr. Justice Story

delivered the. opinion of the Court. Two questions arise upon the instruction to the jury: 1. Whether the bills were prima facie evidence that value had been paid for them by Prior to Welch? 2. Whether, under all the circumstances of the case, Prior was an assignee in equity entitled to maintain the present action ?

Upon-the first point, we are of opinion, that- the law was correctly laid down by the Court below-The argument of the defendant’s counsel admits, that,where a bill imports on its face to be for u value received,” it is prima facie evidence of that fact between the original parties; but it is stated, that it is not evidence of the fact against third persons. We know of no such distinction. In all cases where the bill can be used as evidence either against the parties, or against third persons, the same legal presumption arises of its having been given for value received, as exists in relation to a deed expressed to be given for a valuable consideration. In this respect, bills of exchange, and negotiable notes, are *283 distinguished from all other parol contracts, by authorities which are not now to be questioned.a

The assignor of a chose in action cannot interfere in a suit brought by the assignee so as to defeat his rights:

The other question requires more consideration, though it does not in our judgment present any intrinsic difficulty. It has been long since settled, that where a chose in action is assigned by the owner, he shall not be permitted -fraudulently to interfere and defeat the rights of the assignee in the prosecution of any suit to enforce those rights. And it has not been deemed to make any difference whether the assignment be good at law, or in equity only. This doctrine was fully recognized by this Court when this case was formerly before us.b It was then applied to a case, where the whole chose in action was alleged to hare been assigned ; and it was certainly then supposed that the doctrine! in Courts of láw had never been pressed to a greater extent. We are now called upon to press it still farther, so as to embrace cases of partial assignments of choses in action.

It is contended on behalf of the plaintiff, in the first place, that the facts of this case establish by legal inference, that the articles of agreement were entirely assigned in equity to the plaintiff. If this ground fails, it is in the next place contended, that an assignment was made of the debt due by the articles to the extent of 7,600 dollars, the amount of the bills drawn on Mandeville &. Jamesson, and that *284 this, per se, authorizes Prior to sustain the present action.

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In support of the first- position, it is argued, that the bills being prima facie evidence of an equivalent. advance made by Prior, the possession by the latter of the articles of agreement, and the delivery to him of the account signed by Mandeville & Jamesson, afford a legal presumption that the articles and account -were delivered to him as security for the payment, of such advance, and thereby he acquired a lien on them like that acquired by the delivery of title deeds as security for a debt, which lien has always been deemed to be equivalént to an equitable mortgage. It may be admitted, that according to the course of the authorities in England, and as applicable to the state of land titles there, a deposit of title deeds does, in the cases alluded to, create a lien, whichWill. be recognized as an equitable mortgage, and will entitle the party to call for an assignment of the property included in the title deeds. It may also be admitted, that a deposit of a note not negotiable, as security for a debt, will entitle the creditor, after notice to the maker, to. enforce in equity his lien against the depositor, and his assignees in bankruptcy. Such was the case cited at the bar from Atkyn’s Reports.a But in cases of this nature, the doctrine proceeds upon the supposition, that the deposit is clearly established to have been made as security for the debt; and not upon the ground that the mere fact of a deposit unexplained affords such proof. In *285 the case at the bar, it was not proved thaUthe articles were delivered by Welch to Prior at ajl, much less that they were delivered as security for thé. bills. The delivery of the account is certainly an equivocal act, and might have been as a voucher : of the right of Welch to draw on Mandeville &. Jameáson. There is this farther deficiency in the proof, that the bills do not appear ever to have been presented to the drawees for acceptance, which not only rebuts the presumption from .the face of the bills'that they were received for value, since a bona fide holder could not be supposed guilty of such fatal laches ; but draws after it the auxiliary presumption, that they were in the hands of Prior as agent, and, therefore, that he had not any assignment of the articles as security. And it may be added, that the suit commenced-, in Chancery by Prior, for this very debt, and, afterwards, discontinued, does not assert any assigned title in himself, but proceeds against Mandeville & Jamesson, as the mere debtors of Welch. Under such circumstances, this Court cannot say that the instruction of the Circuit Court was correct, that the jury ought to infer, that Prior was an assignee, entitled to sue for the whole debt due upon the articles.

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The ground, then, that there was a deposit of the articles as collateral security, failing, we are next led to examine the position of the defendant’s counsel, that there was a partial lien or appropriation of the debt due from Mandeville & Jamesson, under the articles to the extent of the sum due on the bills, which is equivalent to an equitable assignment of sp *286 much of the debt. It is said, that a bill of exchange is, in theory, an assignment to the payee of a debt due from the drawee to the. drawer. This is un- ’ i . ,doubtedly true, where the bill has been accepted, whether it be drawn on general funds, or a specific fund, and whether the bill be in its own nature negotiable or not; for in such a case, the acceptor, by his assent, binds, and appropriated the funds for the use of the payee. And to this effect are the authorities cited at the bar.a In cases also where an order is drawn for the whole of a particular fund, it amounts to an equitable assignment of that fund, and after notice to the drawee it binds the fund in his hand. But where the order is drawn either on a general, • . „ ' i -i or a particular fund, for a part only, it does not amount to an assignment of that part, or give a lien as against the drawee, unless he consent to the appropriation by an acceptance of the draft; or an obli-. gatipn to accept may be fairly implied from the custom of trade, or the course of business between the parties as a part of their contract. The reason of this principle is plain. A creditor shall not be permitted to split up a single cause of action into many actions, without the assent of his debtor, since it may subject him to many embarrassments jand responsibilities not contemplated in his original contract. fíe has a right to stand upon the singleness of his original contract, and to decline any legal or equitable assignments by which it may be broken

But this principle does not •apjiiy to aparfind1 of *hs Mr. Swann, and Mr. Taylor, for the plaintiffs in error,

argued, 1. That the Court below erred in its instruction to the jury that the words li value received” were evidence against Mandevilie & Jamesson, that money had been actually paid by Prior to Welch, or the bills. They do not claim under the bills, nor under Welch as the drawer. They claim as assignees of the fund on which the bills were drawn; In the case of Evans v. Beatty,a Lord Ellenborough held, that on a guaranty to pay for goods sold to a third person, the declarations of the latter were not evidence to charge the person giving the guaranty; because there might be collusion between the third person and the plaintiff. So in this case, if the defendant proved an assignment to him, Welch’s declaration that he had previously assigned to the plain- • tiff, would not be admissible, and his declaration in toriting cannot have any greater effect. 2. It was not the intention of Welch, and of Prior, that the whole covenant should be assigned, nor does the law impljsuch an assignment. The bills are general, not payable out of any particular fund, and there is no proof of any agreement between Welch and Prior, that the latter should have a lien on the funds in the hands of Mandevilie & Jamesson. The legal consequence of the decision of the Court below is, that the drawing of a bill of exchange amounts, per se, to an assignment in law of the funds of the drawer in the hands of the drawee, so as to authorize a suit in the name of the drawer, without his consent, against *288 the drawee, and when recourse might be had to the former. There is no case to support the idea that the drawing of a bill under any circumstances, will amount to an assignment at law. Cases, indeed, have occurred, where, under peculiar circumstances, a Court of Equity has considered the drawing of a bill as giving to the payee a superior claim or equitable lien. Thus, in the casé of Yeates v. Groves,a the creditor surrendered a security he held, under an express agreement that he should be paid out of the money to arise from a particular specified fund, on which the bill was drawn, and the drawer became bankrupt. But the proposition, that the drawing of a bill on a specific fund would, per se, have created such alien, is repelled by Lord Thurlow. It would be highly impolitic to consider the drawing of a bill, under any circumstances, as amounting to an assignment, or creating a lien, in a Court of law. These questions generally arise on the bankruptcy of the drawer. His general creditors have an interest, and ought to he heard. They cannot be made parties to a suit at law.

Mr. Jones and Mr. Lee, contra,

insisted, 1. That bills and negotiable notes expressing upon their face “ value received,” are evidence of that fact, both as between the original parties, and against third persons. 2. The facts and circumstances of the case establish by legal inference, that the articles of agreement were wholly assigned in equity. The bills *289 into'fragments. When lie undertakes id pay an ifrtegral-sum to bis creditor-, itis-nopaTt of .hisicontraot that hd shall be obliged -to pay in fractions to any other persons. So that if the plaintiff could show a partial assignment to the'extent of the bills, it would not avail him in support of the present suit. Jkit, in the presént case, there is no proof of: any presentment of the bills, much less of any acceptance by the defendant to establish even a partial assignment of the debt. And if there were, it would ;still be necessary to show that there was an assignment of the articles asan attendant security, before the plaintiff could found his action upon them. Indeed, by thé véry terms of the pleadings, the plaintiff undertákes to establish an assignment of the whole debt due by the articles ; and if he fails in this, there is an end to his recovery. So that, in whatever view we contemplate the facts of this case, or the law applicable to it, the plaintiff has not shown any sufficient, title to Sustain his replication to the fourth plea. Several other objections have been taken at the bar to the plaintiff’s right of recovery, which under other circumstances would have deserved serious consideration; but, as upon the merits of the case, as they are apparent upon the record, the judgment of this Court is decidedly against the plaintiff, it is unnecessary to give any opinion upon those objections.

Judgment reversed.

Judgment. This cause came on to be heard on *290 the transcript of the record of the Circuit Court for District of Columbia in the county of; Alexandria, and was-argued by counsel. On consideration whereof, this Court is of opinion that the said Circuit Court erred in instructing the jury, i£ that if they should be of opinion, from,the evidence, that the said bills were drawn for the full and valuable consideration expressed on the face of them, paid by the said Prior to the said Welch, and if there be no other evidence than what is herein before stated, they ought to infer from the said evidence, lhat the said Prior was, and is such an assignee of the right of action upon the covenant aforesaid, as authorizes him to sustain the action in the name of the said Welch’s administrator for the whole debt due by the said covenant, at the tibie of the said Welch’s delivering the said account to the said Prior.” It is, therefore, adjudged and ordered, that the judgment of the said Circuit Court in this case be, and the same is hereby reversed and annulled. And it is further ordered,, that the said cause be remanded to the the said Circuit Court, with directions to issue a, venire facias de novo.

Chitty on Bills, (2d edit.) 12. 62. 1 Wils, Rep. 189. Burr, 1516. Salk. 25. 1 Bos. & Pull, 651.

.Welch v. Mandeville, 1 Wheat. Rep. 23r>,

Ex parte Byas, 1 Atk. 148.

Yeates v. Groves, 1 Ves. jun. 280. Gibson v. Minet, per Eyre, C. J. 1 H. Bl. 569. 602. Tatlock v. Harris, 3 T. R. 174.